In March 2017, the Internet blew up with reports of a Mainecompany that was going to lose millions in a class action overtimedispute due to thelack of a serial (Oxford) comma. Now, an appellate court inGeorgia was asked to rule on the placement of a semicolon in aninsurance policy to determine whether the homeowner had coveragefor a home destroyed by fire.

The case

After Ronald Lee purchased a home in Riverdale, Georgia, ownedby his childhood friend, Jim Constable, Constable's familycontinued living on the property. Constable, who was facingsignificant financial difficulties, paid no rent.

Lee sought insurance for the house from Lawrence Arnold, aninsurance agent who was a friend of Constable. According to Lee, hespoke with Arnold over the telephone to provide him with theinformation required to complete the application. Lee said thatbecause he was not there to sign the application, he asked whetherConstable could sign his name, and Arnold replied, “Yes, that'sfine.”

According to Lee, Arnold knew that Lee would not be living atthe home full-time; Lee told him that he would “be stopping in …because I travel.” Lee also said that Arnold never asked him if hewould be living there, because Arnold “knew [Constable] was livingthere” based on Arnold's friendship with Constable.

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It's in the application

All of the answers in Lee's application for insurance weretyped. In one section of the application, the directions stated,“Check all that apply,” and an “X” was typed in the boxes beside“Primary” and “Occupied by Named Insured”; the boxes beside“Secondary” and “Additional Residence for Insured” were left blank.This section did not include a box identifying the property asrental property.

Another section of the policy directed that all residents of thehousehold be listed, including unrelated individuals. Lee's name,followed by the abbreviation “IN,” along with Constable and his twochildren, followed by the abbreviation “OR,” meaning “other,” weretyped into a column titled “Rel. to Ins.”

The properly subsequently was destroyed by an accidental fire inwhich Constable died and one of his daughters suffered seriousinjuries. The insurer that had issued a policy on the home, MercuryInsurance Company of Georgia, denied Lee's claim.

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Lee sued Mercury, which moved for summary judgment based on thealleged misrepresentation in the policy application that theRiverdale house was Lee's primary residence and Lee's failure toreside at the Riverdale house as required by policy.

Lee also moved for summary judgment.

The trial court granted Mercury's motion and denied Lee'smotion. He appealed, contending that the policy expressly coveredthe loss of the Riverdale house due to fire and that this homequalified for coverage under the policy.

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Generally, the insured must be a full-time resident of thehome to have homeowners' coverage. (Photo: Shutterstock)

The Mercury policy

The Mercury policy provided that it would cover

the dwelling on the residencepremises shown in the Declarations used principally as aprivate residence, including structures attached to the dwelling;materials and supplies located on the residencepremises used to construct, alter or repair the dwellingor structures on the residence premises….[Emphasisin original.]

The policy also defined residence premises asthe “one, two, three or four family dwelling, condominium or rentalunit, other than structures and grounds, used principally as aprivate residence; where you reside and which is shown in theDeclarations. [Emphasis in original.]

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The Georgia Appellate Court'sdecision

The Georgia appellate court reversed the trial court's grant ofsummary judgment in favor of Mercury, as well as its denial ofLee's motion for summary judgment in his favor, on the issue ofcoverage under the policy.

In its decision, the appellate court observed that punctuationwas “an important indicator of meaning.” A semicolon, the appellatecourt continued, normally was employed “in marking off a series ofsentences or clauses of coordinate value.” A semicolon separated“separate consecutive phrases or clauses” that were “independent ofeach other grammatically, but dependent alike on some wordpreceding or following.”

Here, the appellate court said, the definition of “residencepremises” “could be read by a layperson as having two separate,consecutive clauses (definitions) dependent alike upon thepreceding word 'means.'”

It reasoned that, based on “the placement of the semicolon” inthe definition of “residence premises,” a layperson couldreasonably understand the defined term to mean “the one, two, threeor four family dwelling condominium or rental unit, other thanstructures and grounds, used principally as a private residence” or“where you reside and which is shown in the Declarations.”

The appellate court concluded by rejecting the argument that itshould “read the semicolon out of the policy” based on what itcharacterized as an “anachronistic view of punctuation” reflectedin a 1924 decision, Bridges v. Home Guano Co., “tell[ing]us, what is common knowledge, that there is still much uncertaintyand arbitrariness in punctuation.”

The case is Leev. Mercury Ins. Co.

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FC&S Legal comment

Other appellate decisions in Georgia have reached similarconclusions.

For example, in Hill v. Nationwide Mut. Fire Ins. Co.,the appellate court concluded that the policy provided alternativedefinitions of “residence premises” based on the use of a semicolonfollowed by the word “or.”

Thirty-five years ago, another Georgia appellate court foundambiguity in an insurance policy over a comma. In Georgia Intl.Life Ins. Co. v. Bear's Den, the appellate court addressedambiguity in an insurance policy caused by the lack of an “and” oran “or” after a comma in policy language defining when the policybecame effective. In that case, the insurer asserted that theconnective “and” should be inserted after a comma to create threeconditions for the policy to become effective, while the insuredasserted that the comma separating the first two conditions fromthe third should be construed as the disjunctive “or.” Theappellate court held:

Because neither an “and” nor an “or” appears in the provision inquestion in the instant case, it is not possible to determine fromthe provision itself whether the conditions to enforceabilitystated therein are disjunctive or conjunctive. Either constructionwould be viable. Thus, the provision in the instant case,containing neither a conjunctive nor a disjunctive connective, isinherently ambiguous.

Moral of the story? Grammar and punctuation do matter,especially in insurance policies and other contracts!

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Steven A. Meyerowitz, Esq., is the director of FC&S Legal,the editor-in-chief of the Insurance Coverage Law Report, and thefounder and president of Meyerowitz Communications Inc. Email himat [email protected].